Research Paper 1. Hand in hard copy by 1pm on Wed. 2. copy of paper to 3. Submit copy to Turn It In (see Research Paper link on Webcampus)

STAGES OF THE POLICY PROCESS

Problem Identification Policy Formation Policy Analysis Policy Choice Policy Legitimation Policy Implementation Policy Evaluation Policy Formulation, etc.

Policy Choices & Policy Analysis “Policy analysis is the effort to think carefully about policy problems and potential solutions” Ex ante analysis: Ex post analysis:

Policy is like sausage:

Within democratic systems public policy emerges mainly from a complex mix of: Electioneering and voting Organizing and mobilizing groups Lobbying Assessing public opinion The interacting of all of the above This means policy is messy and needs analysis (but also means analysis is not easy)

Political economy approach 4 important principles: Importance of opportunity costs Multiple ways of solving a problem The use of customer-oriented criteria The use of market like incentives

1)Emphasizing the importance of opportunity costs in achieving public benefits and the principle that benefits must be considered relative to costs.

2) Illustrating that there are a broad range of alternative ways of delivering public goods and services, other than hierarchical, government bureaucracies; for example, housing and education vouchers or the use of incentives and subsidies, rather than fines and sanctions

3) Going beyond traditional performance based criteria and emphasizing the importance of customer-oriented criteria for assessing satisfaction with government services

4) Demonstrating the fact that market-like incentives and price-like mechanisms are sometime superior to rules and coercive sanctions in achieving public objectives

What Should We Consider in Choosing a Policy Solution?

Bottom-up v. top-down Market Incentives v. Government Regulations Coercion v. Incentives Bureaucratic Failures (Shirking, budget maximizing) Market Failures (reduced competition, public goods)

Cost-Benefit Analysis 6 important stages in cost-benefit analysis

1. Problem and Objective Identification: Goals and Values 2. Identification of Potential Solutions 3. Data Collection and Analysis

4. Estimation of Costs and Benefits –Monetization –Human v. Monetary Costs and Benefits –Intangibles –Discounted Value (money now v. money later) –Risk Assessment

5. Decision Criteria –Democratic: fair, politically acceptable –Benefits outweigh costs –Competitive –Scientific –Pareto Principle –Kaldor-Hicks

6. And finally, policy recommendation